The Runt domain gene AML1 is essential for definitive hematopoiesis during murine embryogenesis. We have isolated Xaml, a Xenopus AML1 homologue in order to investigate the patterning mechanisms responsible for the generation of hematopoietic precursors. Xaml is expressed early in the developing ventral blood island in a pattern that anticipates that of later globin. Analysis of globin and Xaml expression in explants, in embryos with perturbed dorsal ventral patterning, and by lineage tracing indicates that the formation of the ventral blood island is more complex than previously thought and involves contributions from both dorsal and ventral tissues. A truncated Xaml protein interferes with primitive hematopoiesis. Based on these results, we propose that Runt domain proteins function in the specification of hematopoietic stem cells in vertebrate embryos.